Forget Solyndra; book says renewables win

October 27, 2011

Solyndra-enthralled Washington might not seem like the ideal place to promote the notion that renewables can help create an era of cheap, plentiful, secure, climate-safe energy — with “nothing to run out. Nothing to cut off. Nothing to worry about. Just energy abundance, benign and affordable, for all, forever.”

But that’s exactly the pitch that Amory Lovins and the Rocky Mountain Institute are making in their new book, "Reinventing Fire: Bold Business Solutions for the New Energy Era," which launches Thursday in D.C. And they’ve attracted some allies not usually noted for their green utopianism: The book includes forewords from Shell Oil President Marvin Odum and Exelon Corp. CEO John Rowe, along with blurbs from people including former President Bill Clinton and former Reagan National Security Adviser Robert “Bud” McFarlane.

Lovins, a physicist and MacArthur Genius Grant recipient who serves on the National Petroleum Council, says the group’s vision is entirely practical — and one that can be driven in large part by profit-driven businesses. It includes calls for “radical” efficiency in transportation, such as a move toward ultralight carbon-fiber cars that can more easily be driven by electricity alone, along with a shift toward “distributed” power grids that are resistant to large-scale outages and fueled largely by renewables.

Best of all, Lovins says, this shift doesn’t require action from an increasingly gridlocked Congress. But the book outlines public policies that could help, including government financing of innovative technologies, taxes based on vehicle miles traveled instead of gallons of fuel consumed, a system of revenue-neutral “feebates” to encourage purchases of energy-efficient vehicles, and regulations that make it easier for new sources to plug into the grid.

POLITICO talked to Lovins about his ideas last week. Here is an edited transcript:

How does the House’s current discussion about clean energy loan guarantees affect prospects for the policies you’re talking about?

Of course, our book is about a very much broader business strategy than anything going in Washington right now.

[But] if you’re talking about Solyndra, that [discussion] is a remarkable misinterpretation of events. Remember that Congress, even going back to the previous administration, told the [Energy] Department to make these kinds of bets and to take risks that the private sector would not. … If you were a venture capitalist in Silicon Valley and you didn’t have eight or nine failures out of 10, you probably didn’t take big enough risks.

But doesn’t the reaction at least indicate that the culture in Washington might not be able to accept this kind of risk?

Why is it that the U.S. in the last five years went from 9 to 10 percent renewable electricity while, say, Portugal went from 17 to 45 percent? It’s because they had a coherent policy. What we’re proposing in “Reinventing Fire” is actually to catch up with and pull ahead of what many other countries are already doing.

What kinds of policies would help?

The federal role in R&D is an important one and should be strengthened. The role of FERC in providing full and fair competition on the grid is important. There’s also a vital DOE and DoD and FERC role in increasing the security of the grid, which is now a grave threat to our security. … There are some policies like feebates that could be done at the federal level, but they don’t have to be.

Wouldn’t some say that the steps you advocate involve the government picking winners and losers?

I wonder what they think the system we’ve got is. I can’t think of any national energy policy that’s been based on rationality. It’s been based on lobbying power.

I would love to get rid of all subsidies. In a time of budget stringency, that makes even more sense. Why are we paying so much of our energy bill through our taxes instead of at the meter and the pump? That’s just a way of concealing from ourselves how much our energy costs.

[What if we had] a national energy policy that allows all ways to save or produce energy to compete fairly at honest prices regardless of their type, technology, size, location and ownership? Now I wonder, who wouldn’t be in favor of that? I think it would be interesting to find out.

Aren’t feebates picking winners and losers? [As proposed in the book, a “feebate” would be a surcharge tacked onto the cost of fuel-inefficient vehicles, while consumers who buy efficient ones would get an immediate rebate. It would be adjusted every year to make it neutral to the Treasury. And separate feebates could be set for each size class, so even people buying SUVs could benefit.]

It’s nothing of the sort. It’s neutral in revenue. It’s neutral in tax. And neutral in size and type of vehicle. … That’s entirely your choice, and your choice will expand.

Some people might say this is all too pie in the sky. Then again, you’ve gotten Marvin Odum and John Rowe to write forewords for the book.

I don’t think Marvin and John necessarily agree with every detail of the book, and I didn’t expect that they would. But as they said in the forewords, this is a helpful contribution to honest dialogue and coherent vision of where we could go with energy.

If you believe this is pie in the sky, I can only say I’d love to have competitors like that who think like that.

Just think about what’s happening in electricity, for example. In a dozen states you can get no-money-down photovoltaics on your roof and beat your utility. With a few other products, all of which are unregulated, you have a virtual utility that can do for the customer what the utility does now … but at a lower cost, with greater resilience.

There’s at least a half-dozen sensible ways that an incumbent utility can respond. Some of them react reflexively to try to tax or block what they see as a competitive threat, but this just annoys the customers so they leave faster. Or the utility could say: ‘This is a good idea. … We will offer these things as our own branded product. Or we will buy the firms that offer the services.’

I can tell you the one business model that’s not very promising is called ‘ostrich.’

Which utilities seem to get it?

I’m not at liberty to say which ones we’re working with. We’ll be announcing them in due course.

There’s a nice saying: If you’re not part of the problem, how can you be part of the solution? We’re trying to change very large systems rather quickly. I think the combination of incumbent and insurgent in the marketplace is the most powerful way to shape that change constructively.

What has the response been in the Beltway?

Actually kind of encouraging. We have done courtesy pre-briefs to DOE and DoD and trade groups. I’ve been encouraged by their receptiveness.

What have you thought of the Obama administration’s ARPA-E initiative?

A very good idea, and still seriously underfunded. I think it’s a great initiative building on the terrific innovation that has come out of [the Defense Advanced Research Projects Agency] for a long time.

I want, by the way, to pay a tribute to a very important part of our strategy. The Pentagon is now starting to value saved fuel at its fully burdened cost delivered to the platform and theater in wartime. … What’s now happening is that the prime contractors that make the land, sea and air platform are starting to compete over radical energy efficiency. That’s going to drive back to the civilian sector.

I would say we have two really effective institutions in America: free enterprise and the military. Our strategy uses both of them.

What about skepticism by some in Congress to the military being involved in renewables, or even some attempts by lawmakers to let the Pentagon buy coal-based fuels? [See previous coverage in POLITICO Pro here and here.]

I think whoever believes that is not paying attention or doesn’t understand the issues as seen by the field commanders.

I’ve been on two Defense Science Board task forces looking at these issues. … These aren’t progressive green advocates. But they’ve found very powerful military logic behind the policies now in place. I’m very pleased to be associated with that movement for the last 20 or 30 years. I think it will give us a stronger America and a safer world.

What is natural gas’s role in your strategy?

We assume a 2.6-fold bigger economy in 2050 than in 2010, yet it needs a third less natural gas while eliminating oil, coal and nuclear altogether. We think that that natural gas usage is conservatively high.

You’ll find our long-run price comparisons are based on unsubsidized renewables competing with nonrenewables that continue to get all the durable and opaque subsidies they get now. … And the renewables would still win.